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Release

TransGlobe Energy Corporation Announces Exploration Discovery at Wadi Bayhan #2, Block S-1

CALGARY, ALBERTA--(CCNMatthews - Oct. 4, 2006) - TransGlobe Energy Corporation ("TransGlobe" or the "Company") (TSX:TGL) (AMEX:TGA) announces a successful Upper Lam gas condensate test at Wadi Bayhan #2.

Block S-1, Republic of Yemen (25% working interest)

Drilling:

The Wadi Bayhan #2 exploration well, which commenced drilling July 11th, was drilled to a total depth of 2,726 meters, targeting Alif, Lam, and fractured basement. The well was vertically drilled through the Lam formation where an intermediate casing was set to a depth of 1,765 meters. The well was then directionally drilled at an angle of 70 degrees to target a fractured basement prospect. The Alif and basement targets had no hydrocarbon indications and were not tested. Tests were conducted on both the Upper and Lower Lam formations.

Wadi Bayhan #2 tested a 29.0 meter portion of the upper Lam sandstone section at a flowing rate of 3.5 million cubic feet per day of natural gas and 35 barrels of condensate per day on a 28/64 inch choke at a flowing pressure of 850 psi. The test has confirmed natural gas in the upper Lam formation of Wadi Bayhan #2, some 331 meters structurally higher than an indicated oil/water contact in the upper Lam formation in Wadi Bayhan #1, drilled by Shell in 1993. Additional drilling will be required to determine if a commercial upper Lam oil pool exists in the down dip position from Wadi Bayhan #2, similar to that found at An Nagyah.

In the lower Lam, a 28.0 meter interval was perforated to evaluate a potential oil column which was identified on wireline logs, pressure surveys and drilling shows. The poorer quality lower Lam formation did not flow after perforation and was not stimulated. There is potential to drill in an updip position which would bring better quality lower Lam sandstones into the oil column.

Following Wadi Bayhan #2, the rig is scheduled to drill an exploration well to the southwest, an Alif/Lam prospect called Osaylan West.

Seismic operations:

A large 610 square kilometer 3-D seismic acquisition program on the southeast part of Block S-1 commenced in mid July and has a planned completion date of February 2007. It is anticipated that the new 3-D seismic program will provide a number of additional exploration prospects for drilling in late 2007 and 2008.

Production:

Production from Block S-1 is expected to average 10,000 Bopd for the remainder of the year. Production has been choked back to the 10,000 Bopd level in response to an increase in water production in several horizontal wells located in the western portion of the field.

To improve production rates and field recoveries the joint venture group has approved a project to utilize natural gas from the An Naeem pool to maintain reservoir pressure in the An Nagyah pool. The proposed project (subject to ministry approval), includes the extraction of stabilized condensate (natural gas liquids or NGL's) from both the An Naeem gas and the An Nagyah solution gas currently being injected. It is expected that condensate extracted from the injection gas will contribute 600 to 1,000 Bpd to production in late 2007/early 2008.

In addition, to produce additional gas liquids from the An Naeem pool the operator is currently evaluating a cycling scheme in conjunction with the neighboring Block 20. If the cycling project is recommended and approved this fall, it is expected that production could commence in late 2008.

This release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical facts that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects, are forward-looking statements. Although TransGlobe believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include oil and gas prices, well production performance, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions.

TRANSGLOBE ENERGY CORPORATION

Lloyd W. Herrick, Vice President & COO

TransGlobe Energy Corporation
Ross G. Clarkson
President & C.E.O.
(403) 264-9888
(403) 264-9898 (FAX)

or

TransGlobe Energy Corporation
Lloyd W. Herrick
Vice President & C.O.O.
(403) 264-9888
(403) 264-9898 (FAX)
Email: trglobe@trans-globe.com
Website: www.trans-globe.com

or

Executive Offices
#2500, 605 - 5th Avenue, S.W.,
Calgary, AB T2P 3H5

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